Bitcoin (BTC) – Technical indicators are feeding optimism for further recoveryPosted on Sunday, December 11 2022 at 8:53 pm GMT+0000
Bitcoin (BTC) has been drifting sideways slightly above the 20-day simple moving average during the second week of December, producing a series of tiny candlesticks.
Although the medium-term outlook remains gloomy for now, technical indicators are feeding optimism for further recovery. The squeezed and flattening Bollinger bands are indicating that price volatility has dried up, which suggests a more profound move may soon unfold, with the momentum indicators signaling that the breakout could be on the upside. The Awesome Oscillator finally jumped to the positive region for the first time in more than a month, the KST is strengthening above its signal line, and the IMI is holding firm way beyond the 50-neutral threshold.
Nevertheless, there are a couple of resistance bands that may prevent a remarkable rally from evolving. The upper-Bollinger band could avert a test of the 18,000 – 18,200 zone near which a tough battle is expected to take place. A decisive daily close beyond these barricades will confirm further gains towards the 20,000 key area, while even higher, focus will turn towards the November 5th top at around 21,500.
On the flip side, support is currently provided by the 20-day simple moving average. Any remarkable close lower will trigger a fresh test of the lower-Bollinger band and the neighboring 15,600 – 15,400 band shaped by the November lows. Any violation at this point will bolster selling appetite towards the 14,000 area, while a steeper decline could last until the 12,500 level taken from the August 2020 peak.
In brief, Bitcoin has been consolidating inside a tight range since November 21. Over the last few days, this range has tightened further, which suggests volatile episodes ahead. Despite the muted demeanor, the technical picture is raising the stakes for some bullish developments.